On February 4, 2009, President Obama signed into law the Children's Health Insurance Program Reauthorization Act of 2009.  This law reauthorized and expands the State Children's Health Insurance Program ("SCHIP") and went into effect on April 1, 2009.  SCHIP provides health insurance for children of families who earn too much to qualify for Medicaid, but who cannot afford private insurance.   The expanded legislation is expected to provide health care coverage for an additional 3.5 million children and will be funded by increasing the federal tax on tobacco products.

How does SCHIP affect employers?

The new law allows states to provide the benefit by subsidizing employer-provided coverage by making payments directly to either the employer or the employee.  Additionally, an employer's group health plan must permit eligible employees or their dependants who are not enrolled in the group plan to enroll if Medicaid or SCHIP coverage is terminated, or if the employee or dependant becomes eligible for financial assistance through Medicaid or SCHIP.  The employee must request coverage under the group health plan no later than 60 days after the change in coverage.  Employers will need to amend the eligibility provisions of their group health plans accordingly.

Does SCHIP include notice provisions for employers?

Employers that maintain group health plans will also be required to provide employees written notice of their options for health coverage within the state in which the employee resides.  The employer may use a state-specific model notice which will be developed and made available to employers by the Departments of Labor and Health and Human Services.  Notices must be distributed to employees in connection with the first open enrollment or election materials, or distribution of the summary plan description following the date that the notices are available.

Upon request from the state, a plan administrator must also provide information about the benefits available under the group health plan in sufficient specificity for the state to determine the cost-effectiveness of the state providing medical or child health assistance through premium assistance and supplemental benefits.

Employers who do not comply with the SCHIP employee notice provisions will be subject to penalties of up to $100 a day per employee from the date of the failure to comply.

If you wish to discuss your company's obligations or have other questions about this new law, please contact the Nukk-Freeman & Cerra attorney with whom you normally work, or Liza Hecht at  973-564-9100 or via e-mail at lhecht@nfclegal.com.